“Our solid second quarter results reflect excellent execution by our
team and strong demand for Zebra’s solutions. Sales exceeded our
expectations led by exceptional performance in mobile computing.
Profitable growth and disciplined cost management drove earnings per
share near the top end of our guidance range,” said Anders Gustafsson,
chief executive officer of Zebra Technologies. “Given these results, we
expect our full year organic sales growth to be at the top end of our
prior outlook. Additionally, our robust free cash flow will allow us to
pay down at least $300 million in debt principal in 2017, despite
up-front costs associated with the recently announced successful
refinancing efforts. With the integration of the Enterprise business
complete, we’ll continue to focus on extending our leadership position
in growing markets and driving profitable growth.”

$ in millions, except per share amounts

2Q17

2Q16

Change

Select reported measures:

Net sales

$

896

$

879

1.9

%

Gross profit

411

406

1.2

%

Net income (loss)

17

(45

)

137.8

%

Net earnings (loss) per diluted share

$

0.32

$

(0.88

)

136.4

%

Select Non-GAAP measures:

Adjusted net sales

$

897

$

882

1.7

%

Organic net sales growth

6.4

%

Adjusted gross profit

413

409

1.0

%

Adjusted gross margin

46.0

%

46.4

%

(40) bps

Adjusted EBITDA

159

144

10.4

%

Adjusted EBITDA margin

17.7

%

16.3

%

140 bps

Non-GAAP net income

$

80

$

59

35.6

%

Non-GAAP earnings per diluted share

$

1.51

$

1.17

29.1

%

Reported (GAAP) results

Net sales were $896 million in the second quarter of 2017 compared to
$879 million in the second quarter of 2016. Net sales in the Enterprise
segment were $584 million in the second quarter of 2017, compared with
$577 million in the second quarter of 2016. Legacy Zebra segment net
sales were $313 million in the second quarter of 2017 compared to $305
million in the second quarter of 2016. Second quarter 2017 gross profit
was $411 million compared to $406 million in the comparable prior year
period. Net income for the second quarter of 2017 was $17 million, or
$0.32 per diluted share, compared to a net loss of $45 million, or
($0.88) per diluted share, for the second quarter of 2016.

Adjusted (Non-GAAP) results

Consolidated adjusted net sales were $897 million in the second quarter
of 2017 compared to $882 million in the second quarter of 2016, an
increase of 1.7%. Consolidated organic net sales growth for the second
quarter was 6.4% reflecting growth across all regions, most notably
North America and Latin America. Second-quarter year-over-year organic
net sales grew 7.9% in the Enterprise segment and 3.7% in the Legacy
Zebra segment.

Adjusted gross margin for the quarter was 46.0%, compared to 46.4% in
the prior year period. The decrease was primarily due to changes in
business mix. Adjusted operating expenses decreased in the second
quarter to $274 million from $282 million in the prior year period,
reflecting the company's continued focus on improving operating
efficiency, controlling expenses, and the divestiture of the wireless
LAN business.

Adjusted EBITDA for the second quarter of 2017 was $159 million, or
17.7% of adjusted net sales compared to $144 million, or 16.3% of
adjusted net sales for the second quarter of 2016, primarily due to
higher gross profit and lower operating expenses.

Non-GAAP net income for the second quarter of 2017 was $80 million, or
$1.51 per diluted share, compared with $59 million, or $1.17 per diluted
share, for the second quarter of 2016.

Balance Sheet and Cash Flow

As of July 1, 2017, the company had cash and cash equivalents of $95
million and total long-term debt of $2.4 billion.

Free cash flow was $181 million in the first six months of 2017. The
company generated $203 million and incurred capital expenditures of $22
million. For the first six months of 2017, the company made $240 million
in term loan payments and $70 million in scheduled cash interest
payments.

Outlook

Third Quarter 2017

The company expects third-quarter 2017 adjusted net sales to change
approximately (1)% to 2% from adjusted net sales of $906 million in the
third quarter of 2016. The company expects organic net sales growth of
approximately 2% to 5% in the third quarter. This expectation excludes a
4 percentage point adverse impact from wireless LAN business sales and 1
percentage point positive impact from foreign currency translation.

Adjusted EBITDA margin is expected to be approximately 18% to 19% for
the third quarter 2017, favorable to the prior year period. Non-GAAP
earnings per diluted share are expected to be in the range of $1.65 to
$1.85, assuming an effective tax rate in the low- to mid-20% range.

Full Year 2017

The company expects approximately 3% to 6% organic net sales growth for
the full year 2017, which is at the higher end of our prior outlook.
This expectation excludes a 3 percentage point adverse impact from
wireless LAN business sales and assumes minimal foreign currency impact.
The company expects organic net sales growth to moderate through 2017
considering year-over-year comparisons.

Adjusted EBITDA margin is expected to be in the range of 18% to 19% for
the full year 2017, an improvement compared to the full year 2016.

For the full year 2017, the company expects to make debt principal
payments totaling at least $300 million.

Conference Call Notification

Investors are invited to listen to a live webcast of Zebra’s conference
call regarding the company’s financial results for the second quarter of
2017. The conference call will be held today, Tuesday, Aug. 8, at 7:30
a.m. Central Time (8:30 a.m. Eastern Time). To view the webcast, visit
the investor relations section of the company’s website at investors.zebra.com.

About Zebra

With the unparalleled operational visibility Zebra (NASDAQ: ZBRA)
provides, enterprises become as smart and connected as the world we live
in. Real-time information – gleaned from visionary solutions including
hardware, software and services – gives organizations the competitive
edge they need to simplify operations, know more about their businesses
and customers, and empower their mobile workers to succeed in today’s
data-centric world. For more information, visit www.zebra.com
or sign up for our news
alerts. Follow us on LinkedIn,
Twitter
and Facebook.

Forward-Looking Statements

This press release contains forward-looking statements, as defined by
the Private Securities Litigation Reform Act of 1995, including, without
limitation, the statements regarding the company’s outlook. Actual
results may differ from those expressed or implied in the company’s
forward-looking statements. These statements represent estimates only as
of the date they were made. Zebra undertakes no obligation, other than
as may be required by law, to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, changed circumstances or any other reason after the date
of this release.

These forward-looking statements are based on current expectations,
forecasts and assumptions and are subject to the risks and uncertainties
inherent in Zebra’s industry, market conditions, general domestic and
international economic conditions, and other factors. These factors
include customer acceptance of Zebra’s hardware and software products
and competitors’ product offerings, and the potential effects of
technological changes. The continued uncertainty over future global
economic conditions, the availability of credit and capital markets
volatility may have adverse effects on Zebra, its suppliers and its
customers. In addition, a disruption in our ability to obtain products
from vendors as a result of supply chain constraints, natural disasters
or other circumstances could restrict sales and negatively affect
customer relationships. Profits and profitability will be affected by
Zebra’s ability to control manufacturing and operating costs. Because of
its debt, interest rates and financial market conditions will also have
an impact on results. Foreign exchange rates will have an effect on
financial results because of the large percentage of our international
sales. The outcome of litigation in which Zebra may be involved is
another factor. The success of integrating acquisitions, including the
Enterprise business, could also affect profitability, reported results
and the company’s competitive position in it industry. These and other
factors could have an adverse effect on Zebra’s sales, gross profit
margins and results of operations and increase the volatility of our
financial results. When used in this release and documents referenced,
the words “anticipate,” “believe,” “outlook,” and “expect” and similar
expressions, as they relate to the company or its management, are
intended to identify such forward-looking statements, but are not the
exclusive means of identifying these statements. Descriptions of the
risks, uncertainties and other factors that could affect the company’s
future operations and results can be found in Zebra’s filings with the
Securities and Exchange Commission, including the company’s most recent
Form 10-K.

Use of Non-GAAP Financial Information

This press release contains certain Non-GAAP financial measures,
consisting of “adjusted net sales,” “adjusted gross profit,” “EBITDA,”
“Adjusted EBITDA,” “Non-GAAP net income,” “Non-GAAP earnings per share,”
“free cash flow,” “organic net sales growth,” and “adjusted operating
expenses.” Management presents these measures to focus on the on-going
operations and believes it is useful to investors because they enable
them to perform meaningful comparisons of past and present operating
results. The company believes it is useful to present Non-GAAP financial
measures, which exclude certain significant items, as a means to
understand the performance of its ongoing operations and how management
views the business. Please see the “Reconciliation of GAAP to Non-GAAP
Financial Measures” tables and accompanying disclosures at the end of
this press release for more detailed information regarding non-GAAP
financial measures herein, including the items reflected in adjusted net
earnings calculations. These measures, however, should not be construed
as an alternative to any other measure of performance determined in
accordance with GAAP.

The company does not provide a reconciliation for non-GAAP estimates on
a forward-looking basis (including the information under “Outlook”
above) where it is unable to provide a meaningful or accurate
calculation or estimation of reconciling items and the information is
not available without unreasonable effort. This is due to the inherent
difficulty of forecasting the timing or amount of various items that
have not yet occurred, are out of the company’s control and/or cannot be
reasonably predicted, and that would impact diluted net earnings per
share, the most directly comparable forward-looking GAAP financial
measure. For the same reasons, the company is unable to address the
probable significance of the unavailable information. Forward-looking
non-GAAP financial measures provided without the most directly
comparable GAAP financial measures may vary materially from the
corresponding GAAP financial measures.

As a global company, Zebra's operating results reported in U.S. dollars
are affected by foreign currency exchange rate fluctuations because the
underlying foreign currencies in which the company transacts change in
value over time compared to the U.S. dollar; accordingly, the company
presents certain organic growth financial information, which includes
impacts of foreign currency translation, to provide a framework to
assess how the company’s businesses performed excluding the impact of
foreign currency exchange rate fluctuations. Foreign currency impact
represents the difference in results that are attributable to
fluctuations in the currency exchange rates used to convert the results
for businesses where the functional currency is not the U.S. dollar.
This impact is calculated by translating, for certain currencies,
current period results at the currency exchange rates used in the
comparable period in the prior year, rather than the exchange rates in
effect during the current period. In addition, the company excludes the
impact of its foreign currency hedging program in both the current year
and prior year periods. The company believes these measures should be
considered a supplement to and not in lieu of the company’s performance
measures calculated in accordance with GAAP.

(1) The Company sold the wireless LAN business in October 2016. We
are excluding the impact of the net sales of this business in the
prior year period when computing organic net sales growth.

(2) Operating results reported in U.S. dollars are affected by
foreign currency exchange rate fluctuations. Foreign currency impact
represents the difference in results that are attributable to
fluctuations in the currency exchange rates used to convert the
results for businesses where the functional currency is not the U.S.
dollar. This impact is calculated by translating, for certain
currencies, the current period results at the currency exchange
rates used in the comparable prior year period, rather than the
exchange rates in effect during the current period. In addition, we
exclude the impact of the company’s foreign currency hedging program
in both the current and prior year periods.

(3) Amounts included in Corporate, eliminations consist of purchase
accounting adjustments not reported in segments related to the
Enterprise Acquisition in October 2014.

(1) Free cash flow is defined as Net cash provided by operating
activities in a period minus purchases of property, plant and
equipment (capital expenditures) made in that period. This measure
does not represent residual cash flows available for discretionary
expenditures as the measure does not deduct the payments required
for debt service and other contractual obligations or payments for
future business acquisitions. Therefore, we believe it is important
to view free cash flow as a measure that provides supplemental
information to our entire statements of cash flows.